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Lawsuit claims state never disclosed Hideaway Hills subdivision was on a mine it once owned
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Lawsuit claims state never disclosed Hideaway Hills subdivision was on a mine it once owned

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The state of South Dakota should compensate all Hideaway Hills residents since it mined underneath the entire neighborhood up until 1993 but failed to reclaim and warn buyers about the now-collapsing mines, a lawsuit argues.

“The state’s transfer of the Hideaway Hills property without restriction or notice of hazardous conditions” resulted in residents “purchasing and living in homes that are both worthless and dangerous,” the complaint says.

“Hideaway Hills is essentially sitting upon ‘Swiss cheese’ as a result of the mining activities of the state,” it says. “The land over the Gypsum Mine is collapsing” and “eventually all of it is going to collapse into the mine.”

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A detail of the 1968 aerial photograph and interpretations by geologist Nick Anderson.

“You could have a kid fall in a hole, you could have a school bus fall in a hole” or a collapse could cause a gas explosion, said attorney Kathleen Barrow of Fox Rothschild, a large national law firm.

The compliant says the state should compensate residents with money from the South Dakota Cement Plant Trust, which was established to hold all proceeds from the operation and sale of the Rapid City-based plant. The trust had $333,808,945 as of Sept. 30, 2020.

The complaint was filed in Meade County Court in October and 30 residents have signed on, Barrow said. She's seeking permission for it to be a class-action lawsuit, which means she would represent all Hideaway Hills residents.

Barrow said she suspected the mine was larger than previously thought because homes and roads outside of the collapse are experiencing small collapses and shifts in the ground and walls. She said geophysical testing, public documents, photographs and historical memory support the claim.

The lawsuit is at least one of two filed in relation to the April 27, 2020 collapse on East Daisy Drive, which revealed that at least part of the Black Hawk neighborhood had been built over a shallow gypsum mine. More than 40 people from 15 homes were forced to evacuate.

John Clarke, one of the plaintiffs, lives very close to the collapse but wasn’t among those ordered to evacuate.

“We don’t know if our house is safe really,” said Clarke, who lives with his wife, two children and two dogs. “The second issue is my house in not worth anything right now. Nobody’s going to want to buy it because nobody knows what the future is going to hold for this area.”

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Geologist Nick Anderson said this crack in the mine's walls has "grown significantly" from when he first explored the mine in April 2020 until he last visited in November. 

Clarke said he’d like to move, but there’s no way he can afford two mortgages at once. He’s paying for a storage unit in case his family needs to quickly evacuate and says dealing with the collapse has been time-consuming and stressful.

The state and Meade County should pay residents the full market value of their homes so they can move, Clarke said. He said the developers are also to blame but aren’t as responsible.

“I think they have something wrong with their moral compass if they think it’s OK to build houses on land like that,” he said.

What follows is alleged in the lawsuit:

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Two private companies mined gypsum from the Hideaway Hills area from 1917 through 1945. The state and its Cement Plant Commission owned the land from 1958 to 1985 and mined it for the state cement plant from 1958 to 1993.

In 1985, the commission applied for a permit to expand surface mining and take action to prevent erosion. The application projected the operation would end in 1993 and a later public notice says the mine would be turned into pasture land.

The state instead sold the land to Raymond Fuss and his wife in 1994 without any restrictions on how it could be used.

“We’ve done a complete title record search of this from the beginning of time and there’s nothing in the record showing that here was any notice of the mines,” Barrow said.

The state continues to retain ownership of the underground land and said it would owe damages for any mining, the lawsuit says is written in the warranty deed of conveyance from the commission to the Fuss couple.

The state “reserves unto itself all deposits” of minerals, oils and other resources “together with the rights to prospect for, mine and remove them,” the lawsuit says the deed says. Those rights are reserved “upon rendering compensation to the owner of lessee for all damages that may be caused by such prospecting or removal.”

Raymond Fuss and his brother began seeking approval from Meade County to develop the land in 1996. There are now 156 homes in Hideaway Hills.

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A model of the part of the mine exposed from last year's collapse in Hideaway Hills.

The lawsuit says experts it hired to conduct geophysical testing found that the mine extends not just under the area that cavers were able to explore, but under the entire neighborhood and beyond, including the Exit 52 ramp of Interstate 90.

The experts found 56 voids under the neighborhood and cavers observed that 16 are actively collapsing.

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A pile of fill in the part of the mine exposed from last year's collapse. Geologist Nick Anderson said there's a patch in the road above this pile which shows that workers fixed a collapse by dumping fill into the ground until it reached the surface. 

Nick Anderson, a caver who went into the collapse when it first formed, is now working for Barrow in his role as an independent geological consultant. He said the 56 voids were identified through electrical resistivity tomography, which measures resistance between pins in the ground.

A Department of Transportation-funded study used the same method to search for voids under the interstate. A report said contractors found four possible voids through that method but confirmed they weren’t voids through conducting drilling that hit solid material, not air or water.

Testing data can be interpreted in different ways, Anderson said of the different results. 

Anderson said he found aerial photos of the area taken in 1968 by the U.S. Department of Agriculture that show multiple mine entrances and collapses under the entire neighborhood. 

Fox Rothschild is covering clients’ legal fees and won’t be paid unless it settles or wins, Barrow said. She said this is not an unusual practice for class-action lawsuits filed by large firms.

She and the state are currently waiting on a judge to rule whether she can file the lawsuit as a class-action. The state is arguing it can’t be sued due to sovereign immunity.

The second lawsuit, file by a Rapid City firm, is on hold as plaintiffs ask the South Dakota Supreme Court to overturn a Meade County judge’s decision to dismiss the county and former commissioners from the lawsuit. ​Meade County and others knew about the mine before it approved the subdivision, public records show.

— Contact Arielle Zionts at arielle.zionts@rapidcityjournal.com

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